December 13, 2019

Since ‘The Dignity Decree’, the Italian government’s advertising ban for gambling products and services, which entered into force during the summer of 2018 (“Decree”), many operators have queried its scope and the sanctions associated with it. The wording of the advertising ban is so broad that it prohibits any form of advertising, even indirect, relating to betting and other forms of games with cash winnings, through any means. Earlier this year, Italy’s advertising and communications regulator, Autorità per le Garanzie nelle Comunicazioni (“AGCOM”), produced guidelines on the Decree, which clarified that the ban also captured betting and gaming sponsorship activity, as well as all other forms of communication with promotional content. Commercial communications such as product placement, the distribution of branded items (including competitions with branded products as prizes), advertorials and influencer marketing are all within the Decree’s scope – the small amount of permitted activity is largely restricted to ‘informative communications’ such as sporting odds, jackpots, odds of winning a game, bonuses available and minimum bet sizes.

Although certain arrangements were grandfathered – those agreements already in the course of being performed at the date the Decree entered into force (14 July 2018) – the date by which these deals would no longer be excepted (being the date of their expiry or one year after the Decree entered into force, i.e. 14 July 2019), has now passed. Despite some attempts and several more murmurings by certain interested parties to challenge the Decree (including questions as to its legitimacy raised by AGCOM itself), it currently stands and AGCOM is tasked with enforcing it. The sanctions available to AGCOM include fines up to 20% of the value of the advert or sponsorship, but no less than €50,000 for each violation.

AGCOM’s first formal decision has found LeoVegas in breach of the Decree, resulting in a €50,000. The infringing ads were three TV commercials shown on the ‘Winga TV – Sky 237’ channel – a channel dedicated to games run by the operator. LeoVegas disputed that these commercials were in breach of the law, making the points that: (i) these were aired before AGCOM’s guidance was circulated and the full extent of the ban was properly understood; and (ii) that LeoVegas’ deal with Sky had been signed before the July 2018 date when the Decree entered into force and so were excluded at that time of the alleged infringement. AGCOM was not persuaded by either of these arguments – in fact, AGCOM argued that the general nature of LeoVegas’ ad sales deal with Sky meant that it did not qualify as a grandfathered agreement. It, similarly, had no sympathy for LeoVagas’ [more limited] understanding of the Decree’s legal scope.

So, what next? LeoVegas has already presented a legal challenge to the Decree (claiming to the European Commission that ad ban constituted unfair state aid), but it has said that it is considering how to respond to this latest fine. What will be at the forefront of the minds of other Italian-licensed operators, is that AGCOM is enforcing this Decree and it is doing so in a way which makes a public example – although documents released by AGCOM do show that LeoVegas turned down the opportunity to pay one third of the fine to settle the case.

This is likely to be the first in a wave of AGCOM fines with the big TV broadcasters and sports teams, in addition to the legal gambling operators, likely to suffer most given that the sanctions can be imposed on the advertiser, the media owner or the event/activity organiser. From a broadcasting perspective, it will be interesting to see whether or not AGCOM would be so bold as to challenge any gambling advertising carried by television channels under the jurisdiction of other EU Member States where as long as this advertising complies with the laws of its country of origin (the principle the Audiovisual Media Services Directive (“AVMSD“) is based on), it should be deemed to comply throughout the EU[1]. What is almost certain though, is that the guidelines published by AGCOM will be challenged before the courts (whether nationally or at a European level) and the tension between gambling operators and the Italian government will grow.

[1] Whilst the Italian government is free to impose measures which are more restrictive than the AVMSD domestically, where such measures are ‘in the general public interest’, ‘justified’, ‘proportionate’ and ‘necessary’, it must not ‘take any measures which would prevent the re-transmission, in its territory, of television broadcasts coming from another Member State’ – Recital 10 of the Revised AVMSD (Directive (EU) 2018/1808).